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When electricity prices were low, it was unnecessary to justify the upfront cost of money required to install photovoltaic equipment, solar water heaters and similar equipment. The reason was simple to understand - it would simply take too long to recoup the cost of the equipment in the form of lower energy bills.

But prices are now higher than many of us ever expected. As energy prices continue to go up, the amount of time required to recoup the upfront cost goes down. In addition, a number of state and local tax incentives make it even easier for homeowners to go solar and save money right away.

Photovoltaic systems have also come a long way. The costs of installing solar panels is still high, with a typical two kilowatt installation of solar panels from OVR Solar costing approximately £10,000 / ($20, 000) in most cases, but special tax incentives and long term energy savings can help homeowners recoup those upfront costs faster than ever before.

Encouragement for our governments is now forthcoming. This tax savings can help eligible homeowners recoup some of the costs of installing solar panels and solar water heating systems up front, in addition to the energy savings they will enjoy down the road.

Many states also provide special tax incentives for homeowners who install eligible solar panel and solar water heating systems. The specifics of these tax rebates and tax incentives vary from state to state, but many states provide at least some level of tax relief for homeowners who install and use energy efficient systems.

Breakeven point for your outlay may seem far away at todays prices - but what about at tomorrows?. However, as the prices for heating oil, gas and other forms of traditional energy continue to soar, so will demand for alternatives

When the time comes to do work around the house, finding good deals on home improvement loans can be vitally important.

Home improvement loans can be used to help you improve any part of your house or other real estate, providing you with the money to get the materials that you need and to hire the professionals that can get the job done.

Interest rates tend to be lower, since the improvements can actually raise the value of the real estate, and home improvement loans can even include some of the external costs associated with building (such as building permits and property taxes.) Best of all, you don’t need to supply any additional collateral… the improvements and the real estate serve as their own guarantee.

Equity is a key factor

When applying for home improvement loans, the equity of your house or real estate comes into play in a major way. Equity, if you aren’t sure, is the amount of money that you have invested in the home or property… in other words, it’s the portion of the house that you actually “own”, and that isn’t tied up in a mortgage or other loan.

If you have a mortgage for £100,000 on a home and have already paid £50,000 of it, then you have 50% equity in that home… or £50,000. This means that if you apply for home improvement loans on that house, the equity that you have will be a major factor in determining how much you can borrow.

The equity in the house serves as the collateral for the loan, and allows you to get home improvement loans that you otherwise might not be eligible for.

Researching the project

Before applying for home improvement loans, you need to gather some information. You’re going to need to get the cost of supplies from at least 2 or 3 different outlets (such as building supply stores), as well as estimates from 2 or 3 contractors on how much the entire job will cost.

From there you need to start getting quotes from banks or finance companies, showing them the work that you plan on doing as well as the estimates for materials and labor.

After receiving several loan quotes, look them over and see which one has the lowest interest rate with the best terms… this is the place you want to get your home improvement loans from.

Once you’ve obtained your loan and started on your improvements, you need to start working on repaying what you’ve borrowed.

Not only does fast repayment prevent damage to your credit report, but it can also help to establish a good working relationship with a lender which can lead to lower rates and better terms down the road.

You may freely reprint this article provided the following author’s biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

Many of these fees are fixed but some can be negotiated.

Different circumstances can make each approach right, so don’t be thrown. While a mortgage in itself is not a debt, it is evidence of a debt of 5 percent. So how do you find a lender or broker you can trust? It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed.

Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. Different lenders charge different fees. In other words, the mortgage is a security for the loan that the lender makes to the borrower. Some will quote you precise, competitive rates 7 percent. Go for a new house with geld lenen met bkr registratie, 419383 euro .

Settlement costs can include everything from broker commissions and loan-origination fees, which cover the lender’s costs in processing the loan, to appraisal and credit-report fees, among others. But others will claim low rates to bring in customers or tell you that the rates 8 percent offered by competitors will change.

See which lenders are charging fees 9 percent and for how much. And of course, each loan and each borrower are different. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property. In most jurisdictions mortgages are strongly associated with loans 9 percent secured on real estate rather than other property and in some cases only land may be mortgaged. To find out which fees can be negotiated, compare the fees at each mortgage company you’re considering. Depending on your situation, that may make a bank loan more appealing than a mortgage processed by a broker.

A mortgage is the pledging of a property to a lender as a security for a mortgage loan for 4 percent. Brokers work with many mortgage bankers and, as a result, can sometimes find slightly more competitive rates 7 percent perhaps lower but dealing directly with a mortgage banker can move a loan along more quickly. Although most mortgage experts say that rates 10 percent are pretty much the same wherever you go, give or take this tiny 3 percentage. Start with credibility. It’s not easy to know if the prices quoted by lenders are reliable. Both banks and brokers have their strengths and weaknesses. Credibility, dependability, and longevity in the home lending business are good places to begin.

Many homeowners are lucky enough to find a house that represents exactly what they want in a home. They buy it, make the payments on it, and live more or less happily ever after. Others are not so fortunate. Some buyers who live in a pricey market may have to settle for less house than they need, hoping to find a solution to their lack of space later. A third group of buyers may find that their housing needs change over time, as their family size increases. What can be done in these situations?

A common solution to these problems is to add on to the house, often accomplished by converting a garage to a room, adding a room over the garage, or simply adding a room somewhere else on the property. For these projects, a home equity loan is a great source of financing. The home itself is used as collateral for the loan, and the addition actually increases the value of the house. As most of these projects involve a fixed cost, the payments can be structured at a fixed interest rate over a specific period of time. But what about the do-it-yourself project? What if the problem with the home isn’t a lack of space, but a lack of taste on the part of previous owners? Is there a better financing choice in these situations?

If your problem is gold appliances, lime green carpet, and smiley face wallpaper, you may be looking at a remodeling project of indeterminate duration. For such a project, a better financing choice would be a home equity line of credit, or HELOC. A line of credit offers greater flexibility, both in interest rates and repayment terms, than a traditional line of credit. The loan amount is based on the amount of equity in the home, but the funds aren’t dispersed all at once. Instead, the borrower is given a checkbook, a special credit card, or both and can use them to draw upon funds at his or her leisure. Payments only apply when money is actually borrowed, and the repayment plans can be arranged with both fixed and adjustable interest rates, depending on the lender. This is ideal financing for someone who has purchased a fixer-upper home that needs a variety of changes, repairs, or modifications. The credit card can easily be used to purchase paint, drapes, flooring, appliances or whatever the homeowner requires to make the home fit their needs.

If you just need to hire a contractor to add a gameroom to your home, a traditional home equity loan would work well. For ongoing projects with indefinite timeframes and budgets, a home equity line of credit may be the best choice.

©Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation and credit counseling information and HomeEquityHelp.net, a site devoted to information on mortgages and home equity loans.

The Property Index site has a vast range of property for sale in Spain, view the range online.

Regardless the fact that the Property Index is seen as a newcomer house, incorporated only in March 2007, they have quickly achieved expert status. They are actually a extremely artless house focusing on catering to everyone who is looking to buy, sell, rent or let land almost anywhere in the world. Their promise is to help you out laser target just what you have called for very swiftly and, too, painlessly. Real estate is available for the asking in most areas of the world currently, maybe the fanciest area being property for sale in Spain. It’s quite easy to list a slew of the fabulous properties on the market in Spain, one motive for picking realty here being the houses and apartments you can purchase and the phenomenal option of living right amid this high-spirited population.

It’s one of the truly well-liked property markets currently, and in view of the scenic beauty and the wonderful weather surrounding you, how could you be wrong! Real estate in Spain is immersed in culture, art and history, this country has been and still is home to a good number of indigenous civilizations. Only 20 years ago you’d find a mere trickle of English looking for properties in Spain. Ask anyone who has chosen to move to Spain and they’ll tell you the same. Many would look upon it as a simple fashion and others look upon it as a near to an addiction. People actually moving to this region will typically range from young freshly weds looking for a life perspective to retirees who intend to unwind and enjoy themselves.

Bear in mind, though, that you may hit on a few obstructions when acquiring properties in a foreign market — you’ll have to cover a million actions when strategising, visiting or purchasing. If you miss out on one single minute action this may kick up wide-ranging obstructions not to forget, most importantly, a failed investment. Obviously and expectably with this well-liked region, properties might be dear in this place which is clearly owing to the wide spread demand. Nevertheless the patron is spoilt in such a location so wonderful in terms of warm land and panorama. Actually it offers the whole shebang a client might ever yearn for and more.

Buying foreclosures can be extremely profitable for real estate investors. However, most of these homeowners are mortgaged to the hilt. They have no equity, and big loan payments. In fact, many actually owe more than the property is worth!

Most investors will walk away from these deals because they see no obvious profit. However, you can “create” your own equity by negotiating a “Short Sale” with the bank or lender.

Why Short Sales Don’t Work

However, even experienced investors fail to create successful short sales, because they do not know the most important secret of all when doing short sales. Without this secret, an investor with the greatest negotiating skill will fail. Without this secret an investor armed will all the right paperwork with fail. And without this secret, even an investor with an air-tight case of low value including repair estimates, etc. will fail.

It’s not that negotiating, paperwork, and a convincing case are not important. It’s just that you’ve overlooked, the most important element that lenders use to determine what they will take for a property in default. It is therefore

The Ultimate Short Sale Secret

Ok, I won’t keep you in suspense. Here’s the secret: In order to get big discounts from a lender on a property facing foreclosure, you must control the Broker’s Price Opinion. (BPO).

What is a BPO? In short, it is a value appraisal. When a short sale package is submitted to the bank, they send out a real estate agent or Broker to the property to judge its value.
The broker or agent handling the BPO is working with the bank. Their job is to simply visit the property and give their opinion on its value “as is”.

And here’s the key: it’s a broker’s price OPINION! And since opinions are subject, you have the ability to Influence that opinion. Learn how to do that and you can create $10,000’s in your bank account with little effort.

Step 1: Do Your Own Research

Before you’re ready to influence the BPO, you’ll have to start out with doing your own research and preparing your short sale package effectively. What should you include?

By this time, you should have already done a walk-through of the property. If you have not done so already, inspect the property (preferably with a home inspector or real estate broker of your own) and gather the following:

Photographs of the inside and outside of the property. This should include room-by-room pictures, cracks in the ceiling, other states of disrepair, you get the picture.

A list of repairs that are needed, from normal wear-and-tear to major improvements. Get an estimate for these repairs - try for the highest bid you can obtain!

Information on the neighborhood, local economy, and other local factors that can lower the value of the home. Offer specific negative information about the property. This can include local newspaper articles or information from the Vital Statistics office in your state. (You should be able to access these from a local library.)

Information about the family. Remember, the Brokers and Loss Mitigators are people, too. Photographs of the family, information about their hopes, and concrete evidence of how this short sale will help them move on with their lives…

Now you’re ready to make an offer. Submit the paperwork with your offer in writing by fax to the loss mitigator with whom you are working.

Now, follow up with the loss mitigator. Make sure that they have received all your paperwork and offer. This is extremely important. It sometimes seems that lenders have a special fax machine design to eat your paperwork. If they haven’t received it, fax them again, immediately.

Step 2: Influence the Broker’s Price Opinion

When you are on the phone with the loss mitigator, mention that the BPO agent is to contact you, before going to the property, because you are the only one who has the key and can let them in. Follow this up with a fax, so they have your contact info in their file. If the BPO agent goes out there without you - you’re sunk.

If possible, take the package you have prepared for the short sale and bring it with you to the property to meet the first agent performing the BPO. The goal here is to make sure that the agent sees it through your perspective. Remember - in the real estate world, agents typically try to get the best appraisal values possible, because they have a cut of the action. Most homeowners trying to purchase a home need top value in order to qualify for the loan.

With a short sale, however, the agent is simply doing a job, not necessarily assessing the value of a property they are getting a commission from. Sometimes the first BPO is simply based on a “drive-by”, which basically means that they’re looking to see if the property is still occupied and they want to make sure that the broker’s price opinion is still line with what they believe the value of the home is.

If possible, do the walk-through with the agent and point out flaws and repairs. Be assertive, but don’t annoy them.

This agent is experienced and does this kind of work for a living. Usually, agents and appraisers are asked to value properties at the high end of the scale. It is unusual to ask for low numbers, so it is important that you meet the agent at the property. Plead your case and ask for the lowest BPO possible.

Step 3: What to do if the BPO is too “high”

If the bank rejects your short sale because of the BPO, you’re going to have to challenge it. If the BPO agent did a drive by and did not call you, you can build a case that the lender did not get a true value because of the serious damage within the house itself. If you have photos, now is the time to send them along with your rebuttal.

If you believe the comps are inaccurate, make sure you have your own to support your case. The info should be pulled from an accepted database.

Request a second opinion. Remember - don’t haggle or ask to speak with a supervisor. You don’t want to get your file 86′ed by loss mitigation because you are overly aggressive. They’re in control during this part of the game. All of your negotiations should be in writing and done by fax, unless they tell you otherwise.

The purpose of your next conversation is to make the bank question the first BPO. Banks
are not in the business of losing money, and an incorrect BPO can come back to haunt
them. It’s your job to convince them to sell lower without sounding like you’re trying to
“steal” the property from them.

Many banks will tell you that a second BPO is too expensive. Most BPO’s only cost
around $75.00, but the cost can be as high as 700.00 for an FHA or VA loan. Tell them
that you’ll pay the expenses and meet the agent at the property. You want to be listed as
the contact person.

Get a second opinion. Meet the new agent at the property and plead your case, using any additional research you’ve pulled up as well as the other materials your previously presented. It helps is this agent is local and familiar with the property values in the area.

Take all of your paperwork and give it to the loss mitigators and agent.

Sell your case. There should be a difference in the BPO’s and you can now tell them that the price is simply too high.

Use the sympathy factor - Everyone in foreclosure has a sad story to tell. Make sure the BPO agent knows their story. And tell them, that you’re trying to buy the property as an investor to help out the homeowner and save them from foreclosure, but you need the value to come in at or near (the price you need).

Remember to emphasize anything detrimental to the home value. If the house is ugly, you can tell them that the inside of the house looks just as bad as the outside. An interior BPO is the only way to reflect the true value of the property. It’s important that you stress the value of the interior inspection and do what it takes to make sure the bank agrees to it.

Step 4: Close the Deal

Sometimes the second BPO will be drastically different and the bank will agree to negotiate down. You will still have to go back and forth, until you guess the lowest amount the bank will actually accept. If that meets your requirements - Congratulations.

However, if after a second BPO, the bank won’t budge, it may be time pass and move on to the next deal. 30% of BPO’s simply don’t go through because of refusals to negotiate on the lender’s end. That leaves you with 70% success with your other short sale properties. If you have presented all of your price factors and they still disagree with your offer, then it may be time to move on.

In fact, it may be for the best.

With mortgage fraud and refinancing, many foreclosed properties are leveraged at 125%. It’s best to make sure that the property has at least $20,000 in standing equity. If you need help in deciding what price to accept, check out our Deal Evaluation Tool at www.InvestorWealth.com.

The next article will help you make the most out of your profit, by teaching you the best exit strategies when it comes to cashing out of preforeclosures.

Richard Odessey along with his wife Michelle are founders of the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country and offer how-to tools and kits like the Deal Evaluation Tool (http://www.1shoppingcart.com/app/adtrack.asp?AdID=143414) to help investors to faster and greater real estate success. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors.

This article may be reproduced in its entirety only if unaltered and the resource box is included.

Do you remember when real estate financing meant you saved up enough to put 20% down on a house, and then you got a mortgage loan for the other 80%? Well, you can still do that, but there are many more options now. Here are ten of them.

1. Gifting programs. In some parts of the country, builders fund foundations that give you a portion of the downpayment, so you can get into a home with as little as 3% downpayment from your own pocket. FHA and other lenders have so far approved of or allowed this.

2. No-doc loans. These and “low-doc” loans, meaning no or low documentation requirements, are back, and you can find them through online banks. These are for those of you with bad credit but 20% to 30% to put down on a home. You don’t even have to have a job.

3. FHA loans. The Farm Home Administration doesn’t actually loan the money, but guarantees your loan for the bank, so they can loan up to 97% of the purchase price, depending on the particular FHA program.

4. VA loans. If you have been in the armed services, have a decent job, and can save two or three paychecks, you can probably get a home with a VA loan.

5. Land contract. Also called “contract for sale” and other names depending on the part of the country you are in, this just means that you make payments to the seller instead of a bank. It’s up to you and them to negotiate downpayment amount, interest rate, and the term of the loan.

6. Seller-carried second mortgages. Some banks will allow you to have as little as 5% into a home purchase, but will then only loan you 80%. The seller can take payments on a second mortgage from you for the other 15%.

7. State housing programs. Almost all states have some sort of financing help in the form of a loan-guarantee program or outright loans for low-income buyers.

8. Family loans. It may not be out of charity that a brother or a friend lends you the money to buy a home. A 7% return might look awfully good if their money is sitting in the bank at 2%.

9. Manufacturer loans. Some manufactured-home companies are arranging financing with 5% or less down for their buyers. They must feel their money is secure, since a good modular on a piece of property is nothing like a mobile home on a rental lot.

10. Credit cards. This is a risky one, but if you have a low-interest credit card, you can use it to come up with the downpayment, especially if you can pay it off soon with a coming tax refund, for example. Banks generally won’t allow this, but you can combine this with seller financing.

Are there more ways to approach real estate financing? You bet. This was just to get you thinking.

Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

MONEY MATTERS

Are you planning on buying or selling a home? Maybe refinancing? Perhaps you’d just like to pick up a few tips on home buying, selling and mortgage borrowing-if so you may want keep track of Money Matters in the months ahead as I will be giving out all kinds of tips and insights as we approach the home buying-selling season. I will be discussing a wide variety of real estate and mortgage financing issues you should know (Things real estate agents don’t want you to know). Well, good agents won’t have a problem with you knowing this information but the part-timers and less ethical operators would certainly prefer you not know what I am going to share with you!

You see, buying or selling a home is the largest investment of a lifetime for most people and it is a BIG business deal…a transaction composed people, emotions, contracts and cash…all the ingredients for legal and financial pain if you don’t know what you are doing. Real estate agents earn a commission when a home is sold whether they are the listing agent, the selling agent or both. Real estate agents typically (and legally) represent sellers in a real estate transaction and not buyers. Yet, every day, homebuyers refer to the real estate agent as “my real estate agent”…they are not your real estate agent…they are the home seller’s agent and agents have a legal duty to get the best selling price for the seller. Further, anything you tell them can and probably will be used against you to extract a higher selling price out of the deal. Sellers on the other hand are often manipulated into signing long term listing contracts for up to a year by an agent who will simply throw the listing into the multiple listing service (MLS) and hope another agent sells the property for them.

For agents, the name of the game is to get listing contracts…a common slogan amongst real estate agents is: “if you don’t list, you don’t last”. Once an agent gets a listing contract from a home seller, they will get the bulk of the commission when the house is sold whether they sell it or another agent sells the home. Not many sellers know this fact and many are swooned into long term listing agreements with hopeful promise of selling their homes at the highest possible price only to find out they don’t. Agents will say and do most anything to get a listing contract shy of breaking the law. And the big question for home sellers is are you working with a part time or full time agent? What is their background in marketing and sales? Do you really want to sign a long term listing agreement with a part timer that has one toe in the tub and no business background? Were talking about a business deal right?

Whether you are buying a home or selling a home you should be clearly aware that you will enter into legally binding contracts and relying on mortgage lenders to provide financing for the project. The question then becomes; how much do you know about contract law and mortgage financing? What are the most important elements of a contract and how does that impact you as a buyer or seller? This series of articles is generally drawn from my E-Report (101 Real Estate Tips for homebuyers, sellers and money borrowers). The report is designed as a crash course to provide you the information you need to know to protect your legal and financial interests whether you are a homebuyer or seller. This series of articles will touch upon the information you should know to keep from making blatantly stupid mistakes that could hurt you legally and financially and we’ll try to have some fun in the process…

Which reminds me! If you would like to receive a FREE copy of my E-Report: 101 Tips For Homebuyers, Sellers And Money Borrowers, go to smart Books website, send us an email and requesting a copy and we’ll send it to your email address within 24 hours-absolutely free-Another Ezine Articles Exclusive! Don’t forget to say you saw it at Ezine! Stay tuned!

Copyright © 2006
James W. Hart, IV
All Rights reserved

NAME: Jim Hart
TITLE: CEO-Smart Books Publishing
SMART BOOKS WEBSITE: http://www.smart67.com
FREE PRODUCT: Article offer-free per email request for one week.
MAIN PRODUCTS: Consumer Books, Kits & Special E-Reports in the areas of Real Estate, Business and Personal Finance.
WEBSITE IS A PAY PAL SECURE SELLER: Yes
WEBSITE IS A SECURE CREDIT CARD MERCHANT: Yes
MEDIA INTERVIEWS Yes-See Bio for bookings.

You don’t have to be a sophisticated investor to sell a mortgage, although conventional thinking leads us to believe that only the most astute and risk taking investor will venture into this arena. The fact is that once you understand the process, selling notes is in many respects much simpler than marketing and closing on an actual property. And simplicity of transaction equals consolidation of dollars and reduction of your most precious commodity - time. Taken together, these factors often add up to a shorter path to a greater return on your investment.

Here are some of the things to consider when selling a mortgage note:
1) The note will be more valuable if the interest rate on the loan is higher than prevailing interest rates, because buyers will see it as an opportunity to generate higher returns. Sometimes, for instance, a owner/seller-financed home sale will involve a mortgage with a higher rate, because “owner financed” property sometimes sells to buyers who are otherwise not able to get a loan. This doesn’t necessarily mean they are at a higher risk for default, however, and if you find a mortgage with a good payment history and a high interest rate, this can be a wonderful investment opportunity.

2) Balloon payment notes that are about to come due may seem like a great bargain, because you will get a huge payment soon if you own the loan. But often these loans are trouble in disguise, because if the debtor defaults, you can end up in foreclosure proceedings, and perhaps eligible for only a partial payment on the note. Selling this kind of note can sometimes be difficult unless you sell it for a discount, especially if the person paying on the mortgage has trouble making their payments on time.

3) The same can hold true for loans that don’t mature for a long time - say for example, a conventional 30-year mortgage - because your potential buyer may want to “cash in” sooner. For that reason, a 5-10 year note will typically be more popular with those shopping around for mortgages to buy, and a 3-5 note may bring an even better price.

4) If you have ever applied for a loan to buy a home, you can apply - no pun intended - the lessons you learned from that process to your knowledge of selling a mortgage. The bank you borrowed from checked your credit rating, did an appraisal of the property, and evaluated your ability to produce enough income to make your monthly payments. When you decide to sell a mortgage, the same kinds of criteria will be involved in determining the value of your mortgage note. If you have lots of equity in the house, and the note as a long history of timely payments, for instance, it is probably a sound investment and will fetch a higher price when sold to an investor. If the property is in disrepair and the payment history is sketchy, investors will be hesitant to buy the mortgage, unless it is sold at a deep enough discount to help them offset any expensive problems.
To learn more about selling mortgages - and about buying mortgages for resale - check with a company that specializes in real estate mortgage brokerage work. A skilled professional can answer your questions about selling mortgages, and can also help to introduce you to investment opportunities that meet your immediate needs and fit into your long term financial plan.

Troy Fullwood, self made millionaire, nationally known investor, real estate guru, speaker and coach; would like to share with you creative ways to building your own “Money Tree.” In 1997, Troy founded a company called Pinnacle Investments. Back then, his main focus was primarily based on buying first lien performing and non-performing commercial and residential real estate notes. However, with the ever changing industry, Troy has begun to refocus his attention toward providing investors with the tools they need to build a successful real estate portfolio.
For over eight years, Troy has been whole heartedly involved in the real estate industry. Troy is an investor himself, he has bought and rehabbed homes, purchased rental properties, purchased land, and is currently working on building custom homes and commercial office space.

When the bills are piling up and there doesn’t seem to be any way out, a home equity loan can seem like the answer to your prayers. Home equity loans can also be a great way to jumpstart a business or investment portfolio. However it’s important to realise that in some circumstances, a home equity loan may in fact make your life a whole lot worse.

A home equity loan is like a second mortgage on your home. If your home is currently worth $130,000, and you have a mortgage against it for $70,000, then you have $60,000 of equity available. Some home equity loans may allow you to borrow up to 80% of your home’s value, others may go higher in special circumstances. In this example, you would be able to borrow another $34,000 as a home equity loan and still have only borrowed 80%.

Before making the decision to borrow more, though, it’s important to sit down and really think about what you’re doing. Firstly, and most importantly, why do you want the money? This is a really crucial part of your decision making. Many people use a home equity loan to fund necessary repairs to their home, or make improvements and so improve their home’s value. In that situation, a home equity loan is a great idea, as the extra borrowings will most likely be offset by the increase in your home’s value - as long as you can afford the extra repayments.

Borrowing to fund a business may also be a good use of home equity loan funds. It’s important, though, not to put your money into a business without any track record, because you may well be throwing it away. Also, never use a home equity loan to try and resurrect a business that’s losing money rapidly. You’ll just end up with a bigger mortgage payment headache and nothing else. But if you have a business that is thriving and desperately needs some funds to expand, a home equity loan may well be the solution if banks aren’t interested in giving you standard business finance.

Investing is another possible use of your home equity loan funds. Again, it’s important to think carefully about what you plan to invest in. You could use the home equity loan as a deposit on an investment property. Or you could use it to be good quality shares. You may well regret it, though, if you buy the latest hot tip speculative share! Choose carefully and wisely, and a home equity loan can be a great way to start your investment portfolio.

Debt consolidation is another popular reason for taking out a home equity loan, and can be beneficial, but only if done wisely. There’s no point increasing the debt on your home to clear your credit card debt, only to turn around and spend, spend, spend until all your cards are at their limits again. You need to close all of the cards as soon as they’re paid off, or only keep one with a small limit for necessary purchases.

There are other reasons for a home equity loan which can make it a useful source of funds, but in these situations it’s really important to be sure that you have no other options, and you can afford the repayments. These may include educational expenses, unexpected medical expenses or a family emergency.

There’s also one reason that is very rarely a good reason to put your family home in further debt - big ticket items. Maybe it will feel really good to have that long vacation, or buy that expensive television and furniture, but ask yourself if it’s really necessary or important. If spending the money on unnecessary things means that somewhere down the track you lose your home, you’ll have paid for those things with a lot more than money.

If you think carefully about a home equity loan, and assess your reasons for borrowing more against the family home logically rather than emotionally, then you will be able to make a sensible choice. A final thought - always assess your ability to repay the loan based on reality and perhaps even “worst case scenario” values, rather than optimistic estimates of overtime at work or a promotion. That way you’ll be able to make the payments and enjoy your family home for many more years to come.

Copyright Felicity Walker 2005

Investing and finance are two passions of the author. To find out more, check out http://www.homeequityloanzonecentral.com for more information.